Big Wheels: Used-vehicle values decline 4%

Used-vehicle values continued to fall in October as retail sales ticked down and inventory tightened. The Manheim Used-Vehicle Value Index decreased 2.3% month over month and 4% year over year to 209.4 in October. The index has been declining for much of this year following spikes last year amid supply shortages. [caption id="attachment_58334876" align="aligncenter" width="1920"] Source: Cox Automotive [/caption] All major market segments recorded YoY price declines, with compact car prices falling the most, according to Cox Automotive . Pickup and SUV prices dropped at a lower rate compared with the overall industry. [caption id="attachment_58334877" align="aligncenter" width="2048"] Source: Cox Auotmotive [/caption] Used-vehicle retail sales are estimated to be down 2% sequentially and 4% YoY in October, according to vAuto data. Used-vehicle retail inventory is estimated to have ended October at 49 days’ supply, down one day from the end of September and five days compared with October 2022. The number of pre-owned vehicles available is expected to remain below pre-pandemic highs for the “foreseeable future,” Alex Yurchenko , senior vice president and chief data science officer at Black Book , said last week at Auto Finance Summit 2023 in Las Vegas . “Limited inventory is going to help used prices stay elevated,” Yurchenko said. “Our forecast is for residual values to stay above pandemic levels. ... We're going to have lower available inventory in the next few years compared to 2019. Incentives are increasing, but they are going to stay below pandemic levels.” Average retention values on 3-year-old vehicles are projected to be around 68% of MSRP in 2023 compared with 72% at yearend 2022, largely tied to the recovery of new-car supply , Kristen Lanzavecchia , director of industry solutions at J.D. Power , said at the summit. New-car supply rose 62% YoY to 2.4 million units, or 67 days’ supply, as of Nov. 6, according to Cox Auto. “As we see more vehicles available on the new side, [there will be] less of that substitution effect of consumers who are looking for a new vehicle unable to get that and moving into the used market,” Lanzavecchia said. Meanwhile, consumer confidence declined 1.6% MoM but ticked up 0.4% YoY in October, according to the Conference Board , a nonpartisan think tank. Consumer plans to purchase a car in the next six months fell to the lowest level since April amid inflationary concerns.

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